- The US economy has gained only 194,000 in September, far below expectations.
- Annual wage growth hit 4.6%, within estimates, showing no new inflationary pressures.
- The broad market mood has improved, weighing on the dollar.
Another month, another Nonfarm Payrolls disappointment – the US economy has gained only 194,000 jobs in September, far below 488,000 expected. Does it derail the Federal Reserve's upcoming tapering? Not so fast, as there are several silver linings – August's figure was revised up from 235,000 to 366,000. Moreover, many of the job losses were Delta-related, such as those in leisure and hospitality.
Moreover, the Fed's bar for changing its mind is high. Despite high chances for the bank to print fewer dollars, there is room for the greenback to fall in the short term.
1) Second disappointment: The headline figure not only badly missed estimates but fell short of them for the second consecutive time. That could push the greenback down. In addition, the participation rate dropped, another sign that the road to recovery remains long.
2) Wages meet estimates: Average Hourly Earnings came out at 0.6% MoM – higher than 0.4% projected – but downward revisions resulted in annual salary growth hitting 4.6%. That is exactly what economists had expected. Moreover, an increase in wages makes sense when there are fewer lower-paying hospitality jobs in the mix. Emerging from the Delta crisis – already happening – should push wages down later down the line.
3) Improving market mood: The US Senate kicked the debt ceiling issue down the road, Russia promised more natural gas to Europe, and a summit between the US and Chinese presidents is planned. While all these issues are far from being resolved, the sentiment is much improved and that is set to weigh on the safe-haven dollar.
Overall, there is room for the greenback to decline for now – at least until Tuesday's fresh US inflation figures.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.